A wealth manager is a type of financial advisor who typically works with high net-worth individuals and provides a wide range of financial services, including asset management, financial planning, estate planning and much more. Since wealth manager is not a technical term, it’s especially important to take the time to find out exactly what the relationship will look like before choosing a wealth manager to work with.
Licensed and Registered
The first step in selecting an investment professional to work with should always be checking that they’re registered and licensed. Checking that an investment professional is registered is quick, simple and free through Investor.gov. Any individual you work with should be licensed and registered either with a U.S. or state securities regulator.
You should also avoid putting too much value in a series of designations or certifications. Some certifications and designations come with rigorous requirements, but plenty can be earned (or bought) with minimal effort. Either look into the designation yourself or ask the wealth manager what it means and the requirements for earning it.
The Role of the Wealth Manager and Services Offered
Since wealth manager is not a technical term, the exact role and the variety of services offered may vary. Investment professionals typically fall into three different categories: financial advisors, brokers and financial planners. Wealth managers are typically a type of financial advisor, but an investment professional could serve as both a financial advisor and a broker. Working in these two capacities is not necessarily a bad thing, but the services, fees and standards applied differ.
To make the often-confusing financial services industry more clear to investors, in 2020 the SEC began requiring registered broker-dealers and registered investment advisers to provide clients with a Client Relationship Summary (also known as Form CRS). The Form CRS includes:
- Services offered.
- Fees and costs.
- Conflicts of interest.
- Standard of conduct that is required for the services the firm offers.
- Any reportable legal or disciplinary history.
- Conversation starters to ask your financial professional.
Request and review a firm’s Form CRS prior to working with an advisor and if you have any questions, you should always feel comfortable asking for further clarification.
Before working with a wealth manager, you should understand exactly how you’ll be charged. Is it a flat percentage fee? Fixed rate? A fee based on AUM (assets under management) plus a fee for additional services? Besides knowing the costs you’ll incur; you’ll also want to understand how the wealth manager is compensated. Do they earn commissions on certain products? Is a bonus tied to a specific metric?
Choosing an investment professional is a bit like choosing a spouse: Even if they look great on paper, that doesn’t mean they’re the right match for you. You want to feel comfortable with your wealth manager. This is a person with whom you’ll share not just your financial information, but your life goals, dreams and concerns. If you’re unsure where to start, Investor.gov has some great conversation starters to use when considering a new financial advisor.
Who Are Wealth Managers? The Takeaway
Choosing the right wealth manager may take a bit more time and effort but the end result of finding someone who is the right fit for you is well worth it. Contact us to schedule an appointment if you would like to further discuss wealth management.
Sec.gov, "Regulation of Investment Advisers"
Investor.gov, "Working with an Investment Professional"
Need a Wealth Manager?
If you are currently looking for help with wealth management, contact us. We are happy to schedule an introductory meeting at your convenience.